Proposal to Protect U.S. Contract Broiler Farmers

The United States Department of Agriculture (USDA) is proposing new methods to protect contract broiler growers across the country from unfair payment systems and forced additional expenses.

The new proposed rule is called “Poultry Producer Payment Systems and Capital Improvement Systems.” This is the third in a series of reforms to the “Packers and Stockyards Act” and aims to reduce unfair harm inflicted on contract broiler farmers by the companies they supply.

The USDA notes that there is a “pattern of abuse” being visited upon broiler farmers in terms of ranking payment systems, commonly referred to as “tournament” payment systems. In addition, poultry companies often impose unfair requirements on their contract breeders for additional capital investments.

The new rule, if adopted, “would provide critical tools to allow producers to better identify risks that may arise from capital enhancement practices and would improve USDA’s ability to enforce existing prohibitions on unfair practices capital improvement,” states the USDA. “The rule would also establish a fair comparison requirement to ensure that comparisons between producers (tournaments) are conducted in a reasonable and fair manner that does not disadvantage specific producers.”

Market transparency

Agriculture Secretary Tom Vilsack recently said USDA seeks to “use every tool at our disposal to maintain fair competition, protect producers, reduce costs for consumers, and combat unfair practices, misleading and discriminatory. He added: “As we continue to provide more market transparency tools, we also continue to pull back the curtain to ensure every producer has access to the market information they need. Through these actions, USDA remains steadfast in this commitment and builds ever-stronger momentum toward creating the more equitable markets that those who raise livestock and poultry in the United States deserve.

Proactive protection

Andy Green, USDA senior advisor for fair and competitive markets, noted that this change “will provide producers with a clear base price in contracts, a contracting partner who designs and operates all comparisons fairly, and a access to information that producers – and the USDA – need to identify and stop coercive investment requests Before producers go into huge debt.

The USDA explains that the new rule, if finalized, will not only prohibit base price deductions in contracts, but also support performance bonuses. The USDA is currently seeking feedback on the rule before it is made official. “We look forward to receiving feedback from all interested parties,” Green said.